The South American side stunned four-time world champions Germany 4-3 on penalties after the teams were tied 1-1 following extra time on Monday, pulling off one of the biggest upsets in World Cup history.
"Today, an entire country celebrates," Pena posted on X along with a picture of himself signing the decree.
"It celebrates the victory of a team that represents the deepest part of our identity: the grit, the faith, and the strength of people who never give up."
The text of the decree, also shared by Pena on social media, said that Paraguay's victory went far beyond sport and justified a nationwide celebration.
"The government cannot remain indifferent to this tremendous achievement," the decree read. "It is necessary to facilitate the gathering of all Paraguayans in celebration of this historic day."
Paraguay is the second South American country to declare a holiday after a surprise World Cup result against Germany at the tournament.
Last week, Ecuador President Daniel Noboa also announced a national holiday after his country secured a 2-1 victory over the Germans in Group E to reach the knockout stage.